In this Friday, April 10, 2015 photo, Venezuela's President Nicolas Maduro waves a miniature representation of Panama's national flag, after attending a ceremony at a monument that honors the victims of the 1989 U.S. invasion, in the Chorrillo neighborhood, which saw the heaviest fighting during the invasion, in Panama City. A crowd of several hundred chanted in Spanish, “Maduro, stick it to the Yankee!” Maduro faces problems at home as he begins his third year in office.
Ramon Espinosa
AP

In this Friday, April 10, 2015 photo, Venezuela's President Nicolas Maduro waves a miniature representation of Panama's national flag, after attending a ceremony at a monument that honors the victims of the 1989 U.S. invasion, in the Chorrillo neighborhood, which saw the heaviest fighting during the invasion, in Panama City. A crowd of several hundred chanted in Spanish, “Maduro, stick it to the Yankee!” Maduro faces problems at home as he begins his third year in office.
Ramon Espinosa
AP

Venezuela’s Maduro: two years of troubles

Say what you will about Venezuelan President Nicolás Maduro, but one thing is certain: the man was denied a honeymoon. During his first two years atop Latin America’s fifth-largest economy, Maduro seemed to face a lifetime of troubles: widespread social protests, tanking oil prices, rampant crime, and (according to him) dozens of coup and assassination attempts.

On Sunday, Maduro began his third year in power, but his troubles are far from behind him. In fact, the next years could be even more turbulent and decisive for the man who narrowly won a contested election in 2013 to replace his late boss and mentor Hugo Chávez.

The most obvious hurdle will be National Assembly elections this year that will test party discipline and Maduro’s popularity. The results — and how both sides accept victory and defeat — will be a preamble for an even higher-stakes battle starting in 2016, when the opposition will be able to legally call for a referendum to revoke the president.

The backdrop for the struggle is an economy in shambles. Venezuela already has the region’s highest inflation and poorest performing economy, which has generated shortages of basic goods and headline-grabbing food lines. But analysts say the pain might just be getting started, as the full brunt of falling oil prices ripples through the economy.

Some Venezuelans have been counting the days since Maduro took office, said Agustín Blanco Muñoz, a political science professor at Venezuela’s Central University. But the administration has skillfully undermined the opposition and shored up its flanks by funneling more power to the military, he said.

“In that sense, there really is no opposition,” Blanco said. “The maximum enemy that Maduro has had in these last two years is the economy.”

CRUDE AWAKENING

When Maduro became president on April 19, 2013, Venezuelan crude was selling for $102 a barrel and the socialist administration was pumping millions into housing and education projects that are crucial to its popularity. Now, oil is limping along at $48 a barrel, robbing the government of the hard currency it needs to finance imports, pay its foreign debts and invest in its crowd-pleasing social programs.

A sign of just how tight the times have gotten came last week when the administration slashed the amount of cash travelers can acquire at preferential rates. In the past, visitors going to Europe could purchase up to $3,000 for a trip at 12 bolivares to the dollar (or the Sicad 1 rate). Now, that’s been cut to $2,000. Those traveling to the United States are being hit even harder. Before, a traveler could buy up to $2,500 in greenbacks to visit Florida, for example. Now they only have access to $700 — not even enough to cover a three-day pass to Disneyland for a family of four.

The move is hallmark Maduro: it slams the middle class while leaving his political base unscathed, said Risa Grais-Targow, an analyst with the New York-based Eurasia Group.

“It’s strategic in that it’s more targeted in terms of who’s paying the costs,” she said.

Restricting access to dollars ensures the government keeps more of them to pay debts and import critical goods, but it also further sours the national mood. And by sending more people to the free market for dollars it drives up inflation, which already hit 69 percent in 2014. Bank of America predicts inflation could reach a whopping 174 percent this year.

Yet, the administration seems determined to stick to its byzantine four-tier exchange rate system that, depending who you are and what you do, either makes a dollar worth 6.3 bolivares or 250.

“Venezuela’s problems are to a large extent self-inflicted,” Bank of America wrote in a recent research report. “This could well become the first government in history to actually choose hyperinflation over devaluation.”

POLITICS

This is all bad news for Maduro and the ruling United Socialist Party of Venezuela, PSUV, as the country heads into elections.

First up is the vote for the country’s congress, which is expected before year’s end. Despite repeated calls from the region, the administration has refused to fix a date for the vote — as if it’s waiting for favorable electoral winds to call a snap election.

The administration’s reluctance may be merited. A February survey by Datíncorp found that 48 percent of those polled said they would vote for any opposition candidate, versus 24 percent that would vote for any ruling party candidate.

In addition, the opposition, which has been slammed in the last three elections, is in the middle of primaries in hopes of entering the race with a unified list of candidates.

But Blanco said he doesn’t put much stock in the election. Maduro and the ruling party control all branches of government, including the electoral council, he said. And while polls paint a picture of an anxious country ready for change, most of that anxiety is concentrated in the middle class, he contends.

“The popular masses are not that worried about the direction of the country,” he said. “And the administration has figured out how to keep their stomachs filled despite the misery.”

Maduro also has another factor in his favor: U.S. sanctions imposed on Venezuela in March. The measure is actually quite mild (freezing assets and denying visas to seven Venezuelan officials accused of human rights violations and corruption). But they’ve been a godsend to Maduro, who has seized on language in the enacting presidential decree that declares the Andean nation an “unusual and extraordinary threat.” Alleging the language is a precursor to U.S. aggression, he’s mobilized the armed forces, bucked up his political flanks and has the opposition on the defensive — painting opposition leaders as traitors for failing to condemn the sanctions.

“This has been a hammer blow to the opposition and has helped rally sectors of Chavismo that had been drifting away,” said José Rafael Mendoza, a Caracas-based political analyst. “In that sense it was a very dumb move by the United States.”

POST ELECTION

The big question now is what happens to Maduro after the congressional elections. Economic analysts say he will have to make some painful reforms, including devaluing the currency or raising domestic gasoline prices, which are the cheapest in the world at 5 cents a gallon.

While Maduro has said he’d study measures to fight the “economic war” he’s always stopped short of making significant adjustments. The reasons may be two-fold: The measures would erode his political support among the poorest, and there are entrenched interests in the administration who are getting rich off the policies.

The multiple exchange rates mean that the connected and privileged few who have access to preferential dollars are sitting atop a money-making machine. (One dollar purchased at the official rate of 6.3 bolivares in the morning could fetch 250 bolivares on the open market in the afternoon.)

On the flip-side, the longer the administration keeps from making economic changes, the more likelihood there is for social unrest, as people weary of long lines and shortages amid the impression that a corrupt are benefiting from the system.

Even so, Maduro has tried to pin the problems on shadowy forces and the opposition. As the social malaise has grown, he’s cracked down on protests and jailed prominent political leaders.

With few economic tools at its disposal, “the government strategy seems to be to radicalize, provoke the opposition and demonize the private sector, the United States and whoever else they can find,” Grais-Targow said. Most recently, Maduro has accused the Spanish government of trying to undermine him.

“At some point something has got to give in terms of social dynamics,” Grais-Targow added. “I do think that Maduro is going to be looking at the risk of a serious political crisis in the next year or so…Whether he makes it to year three or four is an open question.”

Maduro can run for reelection indefinitely when his term ends in 2019 and Blanco, the professor, says he wouldn’t be surprised if the president remains in power for “decades.”

He calls the administration a “military-civil-police dictatorship” and he says it has the resources and the means to win elections and cling to power.

“When people say the administration is in intensive care it just doesn’t match reality,” he said. “In many ways, I think this regime is just getting started.”

Miami Herald Staff Writer Jim Wyss is based in Bogotá, Colombia. Follow him on Twitter: @jimwyss

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